The overnight ascension of cryptocurrencies has thrust an entirely new vocabulary onto investors. Blockchain this, token that. Then there are phrases such as “decentralized applications” and “smart contracts” that get thrown about when discussing specific platforms and cryptocurrencies. It can be a lot to digest and a bit confusing. The increase in popularity of cryptocurrency in the past year has been undeniable. Whilst there is celebration regarding the new wave of digital currency there are also some differences between the various types.
Of course, all of these things matter greatly to investors. Why? The ultimate success and proliferation of each digital platform will be determined by software developers, who will find it easiest to adopt the blockchain-token pairings offering the most functionality and capabilities. In other words, all of that jargon will decide the winners and the losers.One of the most important things for forward-thinking cryptocurrency investors to better understand is how smart contracts on the blockchain work. With that in mind, here’s a beginner’s guide to smart contracts and several considerations for your cryptocurrency investing strategy.
Utility tokens represent the right to use of a product or service or cater to a specific function in the ecosystem of the startup. It is important to note that utility tokens are not considered as investments as they provide access to the product of service.
Security tokens represent equity or debt in a startup, they are a bit like shares which hold value as an asset. The purchase of security tokens are seen as an investment because they represent ownership, therefore, they are subject to federal securities regulations. The SEC in the U.S currently views all cryptocurrencies as securities.
Security token offerings (STOs) are set to be the way forward when it comes to security tokens. These STOs have been created to fall in line with the SEC and other regulators regulations, meaning that investors can expect to see the traditional benefits of a security such as; dividends, buyers rights and voting.
In opposition to tokens offered in an ICO which do not give any rights or obligations, and instead provide access to a specific network, platform or service, tokens offered in an STO are actual financial securities that are backed by something tangible like the assets, profits, or revenue of the company, and which offer legal rights such as voting or revenue distribution.
A security token performs the same function as conventional security, except that it confirms ownership through blockchain transactions and also make fractional ownership possible. Security tokens are subject to federal laws that govern securities, protecting investors on some levels. Security tokens are programmable. Since these securities are tokenized on a blockchain, “smart contracts” can make them act in a certain way, without the use of a third party. For example, a loan “tokenized” on a blockchain could automatically make payments without the use of a traditional middleman like a bank.
When it comes to digital currency investments, STOs are considered to have a low appetite for risk because of the diversity in the security token issuance platforms when compared to ICOs. ERC 20 undeniably leads with over 90% token adoption rate in ICOs which is why the market trend in ICOs is skewed due to the event like XRP overtaking ETH as the second largest alt coin in terms of total market capitalization.
Faba LTD is tokenised venture capital company that through our STO invests in viable projects, where Faba becomes an equity shareholder. Thanks to this investment and cooperation of Faba mentor team the companies’ value grow. When the time comes, these companies are excited at multiples of an initial investment. FABA token holders will be rewarded at the moment when a portfolio of Faba companies will be sold. Rewards will be distributed in ETH.
Faba was founded by a group of experienced people, whose interest is to support projects and teams of people with ambition to influence the world.
The Common Vision has helped to define the target segments which are changing the environment today and are contributing to further development: IT technology and hardware, food tech, biotech, education.
The greatest contribution of blockchain for FABA we see in the liquidity of the token for our investors (in case of VC investments there is limited liquidity as the classical VC funds are usually liquidated in a period of 8 – 10 years). Through the tokens, we create a community that is sharing with us the ideas, experience for new investments and the current portfolio of companies.
FABA is a magic bean token that bridges startup community with the traditional venture capital market. FABA financially supports companies with a positive impact on our environment, ecology, medicine, education… We connected venture capital with the crypto community in order to receive valuable feedback on the projects we aim to invest in and on the other side to get new project ideas from the community in order to be supported. There will be an application available for Faba token holders, which will enable to monitor our investments.
For more information please visit links :
Website : https://vc.fabainvest.com/
Whitepaper : https://www.faba-white-paper.com/FABA.pdf
Facebook : https://www.facebook.com/fabainvest/
Twitter : https://twitter.com/FabaInvest
Telegram : http://t.me/fabaventurecapital